Exhibit 99.1

September 28, 2010

Rachel A. Seifert
Corporate Secretary
c/o Community Health Systems Board
4000 Meridian Boulevard
Franklin, TN 37067

Dear Member of the Community Health Systems Board of Directors:

On behalf of the CtW Investment Group, I write to call upon the Community Health Systems (CHS) board of directors to immediately establish a Special Committee of independent directors to (1) investigate the risks to future earnings and potential liabilities created by Community Health Systems’ (“CHS”) billing of the Medicare program, which we view as aggressive and unsustainable; and (2) provide a preliminary report to shareholders on the findings of the investigation no later than October 31, 2010, including the Special Committee’s outline of the steps necessary to address this issue and a timeline on when these steps will be completed. The Special Committee must be convened on behalf of shareholders and operate in a manner that is fully independent of management.

In Federal Fiscal Year (FFY) 2008, analysis shows that CHS generated approximately an additional $60 million, nearly 30% of net income for that year, from billing Medicare for “one-day stays” and through higher than expected admissions from the emergency room.¹ Short stays are viewed as potential indicators of cases of inappropriate patient status assignment that result in higher reimbursement than observation stays and they often originate from the emergency department. As you know, admissions lasting only one day are closely monitored by the Office of the Inspector General (OIG) and according to industry experts, are a potentially costly target and “low hanging fruit” as Medicare’s Recovery Audit Contractor (RAC) program expands nationwide.²

CHS shareholders reacted with concern when management noted in recent earnings calls that admissions were dropping as a result of “one-day stays” being converted to “outpatient observations” and then found no corresponding disclosure in CHS’ last filing on Form 10-Q. Shareholders are especially alarmed by this news given that CHS has emphasized emergency room admissions as a key initiative and growth opportunity.

New measures designed to contain healthcare costs and scrutiny from regulators make this situation unsustainable. In fact, a major publicly traded competitor, Tenet Healthcare, recently noted that it had preemptively addressed the short stay issue and was avoiding claims being “overturned” and “denied.”³ As part of its investigation, we therefore call upon the Special Committee to explain the steps the board is taking to mitigate these risks and protect the interest of CHS shareholders. Furthermore, based on the Special Committee’s independent investigation, CHS should immediately correct any inadequate disclosure by providing shareholders with information on admissions volume impacts, potential risks, and the federal scrutiny on this issue.

1900 L Street, NW, Suite, 900 Washington, DC 20036, 330 W 42^nd Street, Suite 900 New York, NY 10036 202-721-6060

www.ctwinvestmentgroup.com

The CtW Investment Group works with pension funds sponsored by unions affiliated with Change to Win, a federation of unions representing 5.5 million members. These funds are substantial long-term holders in CHS. We detail our concerns below.

Higher Reimbursement for Inpatient Admissions

Medicare reimbursement practices create an incentive for hospitals to admit patients on an inpatient basis rather than billing Medicare for them as outpatients on observation status. To address this issue, the Program for Evaluating Payment Patterns Electronic Report (PEPPER), a federal program administered through state quality improvement organizations (QIOs) that monitors hospitals’ compliance with Medicare rules, provides hospitals with data on the proportion of one-day stays. As noted in PEPPER documents and elsewhere, approximately 40% of all admission denials on medical necessity grounds involved one-day stays. During the last three earnings calls, Chief Financial Officer Larry Cash explained that the declining trend in volumes was driven in part by the movement from one-day stays into outpatient observation visits.

In an OIG report detailing possible reimbursement incentives offered for inpatient admission, the OIG claimed that “one way in which hospitals could increase the number of admissions is by billing one day inpatient stays when the beneficiary actually received outpatient services, such as observational care.”⁴ One-day admissions clearly represent a great deal of revenue for hospitals; as a recent Modern Healthcare article noted, Medicare reimbursements for one-day stays are a significant portion of the Medicare reimbursement paid out for hospital inpatient discharges.⁵

These concerns prompted an analysis of the one-day stay rates at CHS hospitals in greater detail. Additionally, because many one-day stays originate in the emergency department (ED), and because ED services represent an integral part of CHS’ business strategy, we also analyzed CHS’ ED-driven admissions as a whole. Publicly available data reveals three worrisome trends: (1) Higher-than-average one-day rates are observed for patients admitted through the EDs of CHS hospitals; (2) These high rates appear to be a direct result of CHS’ corporate strategy to increase ED admissions; and (3) In general, ED admissions greatly exceed expectations at CHS facilities and increasingly surpass these expectations as years accrue under CHS control.

We estimate that CHS was paid nearly $60 million for excess ED admissions in FFY 2008 alone. Given the attention paid to one-day admissions and the associated reimbursements at stake, we were alarmed to learn that these types of admissions had such a material impact on CHS’ overall volumes, and we are further concerned about their continued impact on future volumes.

Half of all CHS Hospitals Aggressively Bill in an Area Targeted by OIG for Compliance

CMS and the OIG highlight PEPPER as a compliance tool for hospitals. PEPPER recommends further review of admissions by hospitals at or above the 80^th percentile nationally for one-day inpatient stay rates.⁶ Analysis of publicly available Medicare data reveals that a large proportion of CHS’ hospitals are at this level, as is illustrated in the graph below.⁷

In FFY 2008, half of the facilities within their first full FFY of CHS ownership or later placed in the 80th percentile nationally.8 We believe that CHS management therefore knows or should have known about this risk. Of further concern, the chart shows that the proportion of CHS’ hospitals that reach this level has been increasing in recent years. CHS Corporate Strategy Rests on Increasing Inpatient Admissions

The higher one-day stay rates appear to be a consequence of CHS’ stated goal of increasing ED admissions in general. As the slide from the January 2010 JP Morgan conference to the left shows, CHS believes a method necessary for “Significant Opportunities for Growth in Revenue and Operating Profit” is to “Increase Inpatient ER Visits.”⁹ By describing these “ER Visits” as inpatient, CHS articulates that its strategy depends on driving admissions.

Furthermore, CHS management has asserted that corporate growth has been tied to ED admissions:

“ER has been an initiative. When we came to the Company—most of management came in late in 1997. The admit rate out of the ER was 10% or 11%. Today, it’s 15%, which means we’ve done a good job of adding services and a better job of taking care of patients and identifying those, and keeping them there inside the hospital.”¹⁰

Moreover, this strategy is fundamental to management’s plan for integration of the Triad facilities

“We get about 55 to 60% of our admissions through the ER. When we came to the company, about 12 years ago, the admission rate out of the ER was 10 to 11%. Now it’s 15%. Actually, the Triad hospitals had an admit rate, which was lower than the CHS, and we’ve improved that admit rate so far.”¹¹

We are concerned that in these attempts to create growth and to make new acquisitions more profitable, CHS has instituted a corporate policy that appears to have resulted in the admission of many patients who may not have required inpatient care, and which has led to many ED visitors being admitted to inpatient stays that ultimately lasted only one day. Medicare data corroborates the quotes by CHS management outlined above; for example, after acquisition, many CHS hospitals are observed to have an increased number of one day stays that originate in the ED.

CHS Drives One-Day Stays through Emergency Room at Acquired Facilities

The increasing proportion of CHS hospitals reaching PEPPER’s 80^th percentile outlier status does not seem to be coincidental; indeed, the high ED one-day stay rates seen at CHS hospitals are strongly correlated with CHS ownership. The chart below shows the extent to which CHS facilities’ ED-based one-day rates exceed or fall short of the national average, with these facilities grouped according to how long they have been owned by CHS.¹²

When aggregated, hospitals now owned by CHS but not yet acquired by CHS have one-day rates below the national average. However, hospitals in only their first full FFY of CHS ownership exhibit an average one-day rate that surpasses the national average. Hospitals in their third full FFY or later of ownership exceed their corresponding national rates by an average of 35%. Since management has stated that

many potential one-day admissions are now being classified instead as outpatient observation services, the profitability and growth generated by this strategy does not appear sustainable.

Aggressive Emergency Room Admission Practices

Admissions-related risks are not wholly contained within the high one-day rates. In fact, given that one-day rates are used primarily as a potential indicator of unnecessary admissions, the OIG has encouraged the review of even longer hospitalizations.¹³ We worry that CHS’ high short-stay ED admissions, coupled with increased ED admission rates at hospitals following their acquisition by CHS, will draw greater attention from regulators.

To compare CHS’ admission rates to nationally-based expectations, we adjusted hospitals’ ED admission rates for hospital- and patient-based information on national scales.¹⁴ In FFY 2008, 72 of CHS’ hospitals exceeded expected ED admission rates, given their particular patient case mixes and locations.¹⁵ More alarming is the extent to which they do so. Ranking hospitals according to the percent by which they exceed or fall below expected ED admission rates, 44 CHS hospitals are found to place at the 80^th percentile or above nationally; 25 fall within the top 10% of the country. The following chart provides a clearer picture of the extent to which many CHS hospitals exceed their expected ED admissions. Each bar on the chart represents the rate above or below expectations at a qualifying hospital operated by CHS at the end of FFY 2008.¹⁶

Pattern on Emergency Room Admissions Also Highly Correlated with Years of CHS Ownership

Higher-than-expected ED admission rates often seem to begin after CHS acquisition and then to grow thereafter. Immediately prior to acquisition, the average hospital ED admission rate falls shy of the expectations based on the patient- and demographic-adjusted national average; hospitals within their

first full FFY of ownership, however, have an average rate well above that which would be expected. CHS facilities in their third full FFY of ownership or later collectively exceed their overall expected FD admissions by almost 9%. Of course, and as seen in the previous chart, many individual CHS hospitals with different levels of tenure with the corporation exceed expected ED admissions at rates much higher than that.

CHS Emergency Room Admissions Related to Nonspecific Chest Pain Particularly Problematic — A Known Area of Compliance Enforcement

Deeper analysis reveals that these increases may not match national norms regarding ED admission decisions. As one example, visitors to the ED who ultimately are treated for “nonspecific chest pain” exhibit vastly different admission rates at CHS hospitals as compared to others. This category of diagnoses — which has been cited by regulators as a large source of unnecessary admissions — had an average ED admission rate of 28% amongst all national short-term acute care hospitals in FFY 2008.¹⁷ In the same year, and for the same group of diagnoses, hospitals that had been owned by CHS for at least one full FFY prior to the year’s start had an average ED admission rate of 61%. Moreover, 10 CHS facilities each had ED admission rates above 80% for nonspecific chest pain in FFY 2008.¹⁸

Enforcement Activity and Potential Damages

Hospitals have paid substantial sums to settle allegations of inappropriate inpatient classifications. For example, in December 2007, Saint Joseph’s Hospital of Atlanta, a 410-bed system, entered into a settlement worth $26 million to resolve “allegations that St. Joseph’s billed Medicare for short inpatient admissions, usually of one day or less, when the services should have been billed on an outpatient observation basis or as an emergency room visit.”¹⁹ Furthermore, as Medicare’s RAC program is expanding nationwide exorbitant rates of one-day stays are a likely target for increased scrutiny.²⁰

A simplified calculation using the difference in Medicare reimbursement between an inpatient stay and an outpatient observation visit can amount to approximately $5,000 per claim.²¹ Applying this amount to CHS’ nearly 12,000 excess admissions in 2008 would result in almost $60 million, an amount significant enough on its own to warrant deeper examination into CHS’ admission patterns by the Board. Were the amount applied to the more than 46,000 excess admissions observed at CHS facilities since FFY 2002, the potential overpayment would reach $230 million. The observable patterns in CHS’ ED admissions are troubling and could trigger further scrutiny by federal and state governments.

Because estimates show significant costs related to this issue and management has already discussed the impact on admissions volume due to the shift to observation stays, we believe that disclosure regarding the impact on volume, potential risks and expanding federal scrutiny should be made to shareholders along with any steps CHS is taking to mitigate continued risk. Accordingly, we urge you to immediately establish a Special Committee of the board to investigate this issue and make corrections to disclosures as required. We further call on the Special Committee to provide shareholders with an outline of the steps the board will take to address this issue, including a timeline on when steps will be completed.

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Conclusion

We believe it is incumbent on the board to investigate these concerns and provide a detailed explanation of what the board is doing to mitigate the risks associated with its billing practices. As part of its mandate, the Special Committee shall, at a minimum:

	§		Retain independent outside counsel and investigators, with no prior financial or other ties to the Company, its executives, or the board, to conduct this investigation; and
	§		Instruct CHS to immediately correct inadequate disclosure on this issue by providing shareholders with information on admissions volume impacts, potential risks, and the potential for greater federal scrutiny.

The potential impact of these matters on the long-term profitability of CHS requires immediate board action. We look forward to your response to this letter no later than October 12, 2010.

Sincerely,

William Patterson
Executive Director

cc.:		Office of the Inspector General, U.S. Department of Health and Human Services

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